Amazon, Scared of the Apple Tablet, Tweaks Its Kindle Publisher's Cut

Though everybody believes next week Apple will be revealing an exciting tablet PC, complete with reputed e-reader powers, the event has clearly got Amazon running scared: It's just improved its deal for Kindle publishers, significantly.

In a press release to announce the news, Amazon comes directly and efficiently to the point (a slightly unusual step for press releases!) with the words "Amazon.com [announces] a new program that will enable authors and publishers who use the Kindle Digital Text Platform (DTP) to earn a larger share of revenue from each Kindle book they sell." The company is preserving some of its existing DTP royalty share options, but is adding in a new 70% option—giving 70% of list price (net of delivery costs) to authors or publishers.

How very generous of Amazon to leap aboard the 70% revenue share system made popular by Apple's iTunes App Store, and since copied elsewhere in other app markets. Amazon is even trumpeting the move as a remarkable benefit of e-publishing, noting in the press release that "authors often receive royalties in the range of 7 to 15 percent of the list price [...] or 25 percent of the net that publishers receive from retailers" whereas Amazon's new pricing structure "will help us pay higher royalties."

But this is almost completely misleading, for a start: Assuming publishers do choose the higher royalty option, there's absolutely no guarantee it'll translate into larger pay checks for the author—it'll depend on contractual agreements between publishers and their writers, and the only authors who'll clearly benefit are self-publishers. Furthermore, the entire press release, spun expertly to look like a positive move by Amazon, is covering up the fact that until now Amazon's maintained a strict stranglehold over its e-book content with a lower royalty share scheme that has increasingly come under fire from the publishing world as a threat to the future of good book writing. There are also some strict conditions for publishers that come with the 70% option: At launch it'll only be for titles published in the U.S.A, with prices that are at least 20% less than that of a physical copy of the text and hit a maximum of $10.

While these conditions are certainly going to shake up the publishing world, as regards e-books versus physical ones (particularly that $10 price limit!) the timing of the press release gives away Amazon's real motivation: It's just one week until Apple is due to reveal the Apple tablet PC. This hotly-anticipated device is expected to be typical of a new class of portable slate computers with so many multipurpose skills they'll threaten the entire e-reader business (as I've noted before.) And with rumors flying left, right, and center that Apple is extremely busy courting publishers, newspapers, and other content generators in order to provide material for its new machine, Amazon's execs are clearly nervous. So nervous about the future of the business sector they've been snatching for themselves until now, in fact, that they're prepared to adjust the business model of the Kindle platform.

Will it work? In the short term, probably a little: There are enough Kindles in the public's hands that many publishers will be tempted. But in the long term, this strategy is more of a bandaid across a wound Apple is about to inflict—and it won't hold.

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Is it fear or just Amazon learning from the mistake Apple made by negotiating too favorable terms with record labels, who have since revolted? Amazon knows it needs to sweeten the deal for publishers as competing eReaders and eBook stores emerge.

I agree up to a point; Kindle's closed eBook format is toast. But even if the current Kindle were to entirely disappear, Amazon provides a very nice consumer experience and will be a formidable retailer of eBooks. Apple's iTunes (iBooks?) does too of course. This year I'll have four titles available on Kindle with this 70/30 revenue sharing relationship, with Barnes & Noble, hopefully with Apple—in short, wherever people want to purchase eBooks. I also have titles available for download on my site that offer a superior user experience. Bottom line: I want to be available in all the accepted formats of eBooks until we finally arrive at a few really good standards. (Of course, I think ours, which uses Adobe Flash & AIR is technically the best...for now.)

I agree up to a point; Kindle's closed eBook format is toast. But even if the current Kindle were to entirely disappear, Amazon provides a very nice consumer experience and will be a formidable retailer of eBooks. Apple's iTunes (iBooks?) does too of course. This year I'll have four titles available on Kindle with this 70/30 revenue sharing relationship, with Barnes & Noble, hopefully with Apple—in short, wherever people want to purchase eBooks. I also have titles available for download on my site that offer a superior user experience. Bottom line: I want to be available in all the accepted formats of eBooks until we finally arrive at a few really good standards. (Of course, I think ours, which uses Adobe Flash & AIR is technically the best...for now.)